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Should you buy or sell IronNet shares after plunging more than 30%?

By:
on Dec 17, 2021
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  • IronNet shares on Thursday plummeted more than 30% after announcing FQ3 results.
  • The company announced its FQ3 results Wednesday after the close.
  • IronNet’s quarterly revenue edged slightly lower, significantly missing analyst estimates.

On Thursday, IronNet Inc. (NYSE:IRNT) shares plunged by more than 30% after releasing its fiscal third-quarter results. The cybersecurity and defence company announced its most recent quarterly results Wednesday after the close, missing the consensus for analyst expectations on revenue.

IronNet posted a Q3 bottom line of -$2.22, incomparable to the analyst expectation of $-0.15. On the other hand, revenue for the quarter edged slightly lower by 1.4% from the same quarter a year ago to $6.9 million, substantially missing the consensus Street estimate by $4.89 million.

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IronNet also issued a full-year 2022 revenue guidance of $26 million, significantly lagging the Street forecast of $41.98 million.

Is it too risky to buy IronNet stock?

From an investment perspective, IronNet shares trade at a steep price-sales ratio of 15.12, making the stock less attractive to bargain hunters. 

In addition, analysts expect the Virginia-based company’s bottom line to worsen by 15.70% this year, thus keeping off prospective growth investors.

Therefore, with the company’s top-line guidance for FY2022 substantially lagging Street estimates, it may be best to monitor the performance before betting on its exciting opportunity in the cybersecurity space.

Source – TradingView

Technically, IronNet shares seem to have recently completed a downward breakout from a descending channel formation in the intraday chart. As a result, the stock has nosedived into the oversold conditions of the 14-day RSI.

Therefore, investors could target potential technical rebounds at about $6.42, or higher at $8.29. However, given the current bearish pressure, the stock could decline deep into overbought conditions towards $3.03.